Internal Control, Equity Concentration And Investor Confidence

With the development of behavioral finance,investors' confidence has begun to receive widespread attention.Investors' confidence plays an important role in the sustainable development of the company and the orderly operation of the market.Therefore,it is particularly necessary to explore the influencing factors of investors' confidence.Internal control helps to protect the interests of investors and promote the value of the company by carrying out systematic supervision and restriction activities,which may enhance investors' confidence to a certain extent.Internal control audit,as an effective verification of internal control,can transmit signals of internal control status of the company.It has been a while since the implementation of the mandatory internal control auditing policy in China's main board market.Under this background,it is of great theoretical and practical significance to study the impact of internal control on investors' confidence based on the perspective of internal control auditing.Firstly,this paper integrates the indexes of the market and the company,adopts the principal component analysis method to construct the investors' confidence index,to measure the investors' confidence comprehensively and objectively.Then this paper studies the influence of internal control on investors' confidence,and further explores the influence of ownership concentration on the relationship between internal control and investors' confidence,by using data from A-share listed companies from 2011 to 2018.During the sampling period,internal control quality is measured by whether to accept internal control audit voluntarily or not,and internal control audit opinions are used to measure internal control quality during the whole sampling period.The results show that:(1)The proportion of institutional investors holding shares at the market level and the growth rate of operating income at the company level contribute the most to the investors' confidence index,and the investors' confidence of listed companies on the main board is generally low;(2)Internal control can promote investors' confidence.Compared with listed companies that are forced to accept internal control audit,companies that voluntarily accept internal control audit have higher investors' confidence;(3)Compared with listed companies with clean opinion of internal control audit reports,companies with modified opinion of internal control audit reports have lower investors' confidence;(4)Ownership concentration inhibits the promotion effect of internal control on investors' confidence.Compared with listed companies with lower ownership concentration,thepromotion effect of internal control of companies with higher ownership concentration on investors' confidence is weaker.The research in this paper provides a meaningful reference for investors to make scientific decisions and listed companies and regulatory agencies to attach importance to internal control and internal control audit.Investors should establish the concept of value investment.When making investment decisions,investors should comprehensively consider the company's own situation and market situation,and then invest scientifically and rationally;Listed companies should improve internal control and corporate governance in order to enhance investors' confidence in the company and thus enhance its value;Regulatory agencies should further improve and implement the internal control audit system to strengthen supervision over the construction and operation of the company's internal control.